BAM: Moroccan implemented fiscal policy for 2022 despite difficult economic context

Last year saw a significant slowdown in economic activity in Morocco and worldwide, with an increase in the price of energy and food, and tightening financing conditions.

Nevertheless, Morocco’s financial policy for the year 2022 was implemented despite these challenges, according to the most recent report from Bank Al Maghrib.

 “Tax revenues recorded an exceptional performance in almost all categories of taxes and fees, with the exception of the internal value-added tax and the internal tax on consumption of energy materials,” according to the report.

In addition to “an increase in overall expenditures by 15.8%” and “an increase of 5 billion MAD to 8.6 billion in the positive balance of the treasury’s special accounts,” the report stated that ordinary incomes climbed by 20.8%, which counts for the largest growth since 2008. 

25.1 billion MAD in resources were obtained through unique financing techniques. The amount of non-tax revenue increased by 50.5% to 48.7 billion MAD, or 157.3% of what was anticipated under the Finance Law.

The funding from private and public institutions increased clearly by 22.7%, reaching 13.1 billion MAD in 2022; of this amount, 6.5 billion were paid by the ONCF, 4 billion by the National Agency for Real Estate, Survey, and Mapping, 786 million by Maroc Telecom, and 738 million by Bank Al-Maghrib.

The budget deficit decreased over time, falling from 67.1% of GDP in 2020 to 65.9% in 2021 to 5.2% in 2022—below the finance law’s aim of 5.9% of GDP.

The Moroccan treasury had to use the remaining 20.9 billion MAD from the Precautionary and Liquidity Line of the International Monetary Fund due to the tightening of financing conditions both domestically and internationally. 

“The increase in international prices for subsidized materials and the support provided to professionals in the transportation sector exacerbated the clearing costs, which double every year,” according to the Central Bank.

Investment spending increased, reaching 93.8 billion MAD, even if “the impact of the agreement concluded on April 30, 2022 was limited.”

Direct public debt increased by 2.1 points of GDP to reach 71.6% of GDP, with its internal component rising to 654.3% of GDP and its external component rising to 17.2% of GDP.

The report states that “Morocco has generally maintained its public debt at a sustainable level throughout the period.”

The average debt ratio in Morocco reached 71.9% from 1992 to 1995, exceeding the debt sustainability barrier six times, most recently in 2020 and 2022 when the ratio reached 72% and 71.6% and 72.2% respectively.